Subscribe to Outside Magazine
advertisement
Survival Guru

Today's Question
What is the best way to get water if I'm lost in the desert? answer

What's the most reliable tool for starting fires? answer

Greasy Rider

Today's Question
What one equipment change can I make in my home to reduce my water usage most? answer

Why do you drive a grease-powered car, and should I do it too? answer

Videos Ask Dave
  • What kind of dog will make me look manlier? answer
  • Is there a sport that safely combines my twin passions for guns and kayaks? answer
  • How come most of the world's cultures enjoy eating goat, but Americans don't? answer

Online Favorites

Special Issues

Photo Galleries
share this article del.icio.us DIGG Facebook StumbleUpon

Outside Magazine, November 2006

Green Investing Guide
Put Your Money Where the Green Is
Financial advice in the pages of Outside? It's a departure, sure, but it doesn't take a genius to see which way the money's blowing. In the pages that follow, we'll introduce you to a guru of green investing and lead you through a savvy, three-step plan for getting in the game yourself. Because in a world of high gas prices and climate change, cashing in on clean technology and eco-friendly businesses is good for the planet—and even better for your portfolio.

By Carleen Hawn

Mutual Funds | Play the Market | Green-Market Web Sites | Powering Up

green investing
Illustration by Guy Billout

Get in the Game: Mutual Funds

If the thought of directing your own individual stock trades is intimidating, experts suggest you start out by buying shares in a mutual fund, a pool of money collected from a group of investors and managed by a financial expert. Following a fund-specific set of investment criteria, the expert, or fund manager, uses the cash to invest in a range of stocks, bonds, or other assets. "With a mutual fund, you get automatic diversity—you're able to acquire stakes in numerous companies at once," says Matthew Patsky, a portfolio manager at the Boston-based Winslow Green Growth Fund. While stockbrokers charge just about every time you buy or sell shares, mutual-fund companies collect one annual fee that covers all fund-operating expenses. Called an expense ratio, the fee is a percentage of your average net holdings for the year. The funds featured here invest in companies that practice sustainability or carbon neutrality or focus on developing alternative-energy technologies. Most have consistently outperformed the S&P 500 Index average over the past five years.

Talk the Talk
A company's market capitalization is determined by multiplying current share price by the firm's total number of shares outstanding. Those with market caps of $10 billion or more are broadly described as Large Caps and tend to include firms from established industries that generate big revenues. Small Caps have market caps of less than $1 billion and tend to be younger companies with more volatile businesses—and therefore more volatile stocks (read: tech stocks). Generally, small-cap stocks are thought to bear greater risk, but that can also mean greater opportunity for reward. Mid-cap companies fall somewhere in between.

SMART PICKS: MUTUAL FUNDS
1. Calvert Large Cap Growth Fund (clgax) Focus: Eco-savvy large-caps ($10 billion and up) Typical stock: Goldman Sachs, which promotes mandatory pollution reductions Five-year average annual return: 4.88% Minimum initial investment: $2,000 Expense ratio: 1.56%, with a one-time upfront fee of 4.75% of initial investment Net assets: $1.15 billion. calvert.com

2. New Alternatives Fund (NALFX) Focus: Foreign and domestic alternative-energy companies Typical stock: German solar-panel maker Conenergy Five-year return: 5.75% Minimum initial investment: $2,500 Expense ratio: 1.17% Net assets: $95 million. newalternativesfund.com

3. Portfolio 21 (PORTX) Focus: Small-cap clean-techs and large-cap companies with sustainability programs Typical stock: Swiss Re, a corporate leader in global-warming awareness Five-year return: 7.2% Minimum initial investment: $5,000 Expense ratio: 1.5% Net assets: $130 million. portfolio21.com

4. PowerShares WilderHill Clean Energy Portfolio (PBW) Focus: Small-cap clean-techs; holdings are identical to those on the WilderHill Clean Energy Index Typical stock: Canadian fuel-cell manufacturer Ballard Power Systems Return since March 2005 inception: 16.04% Minimum initial investment: $50 Expense ratio: 0.7% Net assets: $664 million. powershares.com

5. Winslow Green Growth Fund (WGGFX) Focus: Clean-tech and eco-savvy small- cap companies Typical stock: Zoltek, of St. Louis, a supplier of carbon fiber for wind turbines Five-year return: 8.2% Minimum initial investment: $5,000 Expense ratio: 1.45% Net assets: $290 million. winslowgreen.com



Next Page: Play the Market

 
Mutual Funds | Play the Market | Green-Market Web Sites | Powering Up